Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Blockchain, Crypto, Digital Assets Regulations
CFTC Publishes DeFi Report for Policymakers and Industry
Report | Release | Jan 9, 2024
CFTC Releases Comprehensive Guide on Decentralized Finance for Policymakers and Industry Leaders
The Subcommittee on Digital Assets and Blockchain Technology of the U.S. Commodity Futures Trading Commission's Technology Advisory Committee (TAC) has released a 79 page PDF report titled Decentralized Finance (DeFi) with the following key findings and recommendations to shine a light and develop a deeper understanding of DeFi and its regulatory implications to balance innovation with market integrity and consumer protection (see Ooki vs CFTC)
Overview of Key Findings
1. Improve Data and Technical Understanding of DeFi
The report emphasizes the need for policymakers to deepen their technical understanding of DeFi. This involves mapping out data, expertise, and resources to grasp the economic structure and technological nuances of DeFi. A gap analysis is recommended to identify and address critical capability gaps, ensuring that regulatory bodies are equipped to understand and oversee the DeFi landscape effectively.
2. Need to Assess Regulatory Perimeter
A thorough survey of the existing regulatory framework is crucial. This step will determine whether DeFi products and services fall within the current U.S. financial regulatory scope and identify any regulatory gaps.
See: How Permissioned DeFi Will Transform Global Payments
The report also suggests evaluating international regulatory approaches to DeFi, fostering a global perspective on regulatory standards and practices.
3. Identify and Prioritize Risks
The identification of risks, including operational, technical, and security vulnerabilities, is a key focus. The report highlights the importance of understanding risks related to liquidity, over-leverage, market manipulation, and illicit finance. Prioritizing these risks will enable policymakers and industry players to address the most pressing challenges first, ensuring a safer DeFi ecosystem.
4. Develop a Regulatory Framework
The report advocates for the evaluation of potential policy responses, ranging from disclosure requirements and regulatory reporting to governance regulation. It also suggests considering activity restrictions and resolution planning, aiming to establish a robust regulatory framework that can adapt to the evolving nature of DeFi.
5. Collaborative Engagement
Collaboration with domestic and international standard setters, regulatory bodies, and DeFi builders is highlighted as a critical step. This approach aims to foster a constructive dialogue and shared understanding among all stakeholders.
See: A Global Approach to DeFi Regulation
Engaging in open communication and policy coordination within the regulatory community is seen as vital for developing effective and harmonized regulatory strategies.
Why It's Important
The CFTC "Decentralized Finance Report" provides a comprehensive framework for understanding and regulating DeFi. It emphasizes the need for increased knowledge, risk assessment, regulatory clarity, and collaborative efforts between policymakers and industry leaders.
See: UK’s Future Crypto and Stablecoin Regulation
This report is a key step towards bridging the gap between emerging financial technologies and established regulatory practices, ensuring a balanced approach that fosters innovation while safeguarding the financial system and its consumers.
Download the 79 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Federal Judge Rules Against Terraform labs
Crypto | Jan 2, 2024
Image by Freepik
A New York judge has granted the SEC a summary judgment over the claim that Terraform sold unregistered securities
- Judge Jed Rakoff ruled that four crypto tokens offered by Terraform Labs, including UST and LUNA, wLUNA, and MIR were unregistered securities based on the Howey test, a Supreme Court precedent for defining investment contracts.
- Terraform Labs, during the crypto bull run of 2021, was a significant player in the crypto space, but faced a dramatic downfall with the collapse of UST in 2022. The SEC has sued Terraform Labs and co-founder Do Kwon in February 2023 for orchestrating a multibillion-dollar securities fraud.
- The jury trial is scheduled to begin in January 2024.
- The decision diverges from a separate ruling in the Southern District of New York regarding the XRP token.
Terraform Labs spokesperson in an email to The Block:
"We strongly disagree with the decision and do not believe that the UST stablecoin or the other tokens at issue are securities. Further, the SEC’s fraud claims are not supported by evidence, and we will continue to vigorously defend against those meritless allegations at trial."
Outlook
The divergence in legal interpretations between different courts, as seen in the Ripple case and now Terraform Labs, adds complexity to the regulatory environment for crypto assets. The Terraform Labs summary judgment strengthens the SEC's approach to treating certain crypto assets as securities, potentially setting a precedent for future cases.
See: Moody’s Analytics on Stablecoin Depegging
The case puts a spotlight on algorithmic stablecoins, a relatively new and complex type of crypto asset, and their regulatory treatment. The denial of summary judgment on fraud claims suggests a protracted legal battle ahead, with significant implications for Terraform Labs and its stakeholders and possible precedent that could shape the future of digital asset regulation. It is imperative for regulators, companies, and investors to engage in constructive dialogue to establish a regulatory framework that balances innovation with investor protection.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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China Intensifies Cracksdown on Tether in Forex Trading
Crypto | Jan 2, 2024
Image: Unsplash/DrawKit Illustrations
Chinese authorities have intensified their crackdown on the use of cryptocurrencies, particularly Tether (USDT), in illegal foreign exchange trading
China's Supreme People's Procuratorate, in conjunction with the State Administration of Foreign Exchange, has issued a stern directive on Dec 27, 2023 against the use of Tether (USDT) as an intermediary in trading yuan with other fiat currencies.
See: China’s CBDC: Offline Digital Yuan Payments via Super SIM Cards
This crackdown is a continuation of China's stringent regulatory stance on cryptocurrencies, which includes a major ban on cryptocurrency activities like trading and mining imposed in 2021 and comes as part of China's ongoing efforts to mitigate financial risks and maintain control over its financial system.
The Focus on Tether
The Chinese authorities have declared the conversion of yuan to cryptocurrency and vice versa as illegal, including indirect involvement such as technical support or offering exchange services. This includes using cryptocurrencies as a medium to convert yuan into foreign currencies or the reverse. Tether, a stablecoin pegged to the US dollar, has been specifically targeted due to its role in facilitating illegal forex transactions.
Recent Cases
The prosecutor’s office cited several cases of illegal foreign exchange crime involving Tether. One notable case from 2019 involved a crypto trader who received over 22 million UAE dirhams (approximately US$6 million) from a Chinese gambling syndicate in Dubai and converted it to yuan using Tether. The trader was sentenced to seven years in jail and fined 2.3 million yuan (US$322,000).
Another case involved Zhao Dong, the founder of the over-the-counter crypto trading desk RenrenBit, who facilitated crypto and local currency trading using Tether. He was also jailed for seven years and fined a similar amount.
Outlook
Despite the ban, cryptocurrencies like Tether have remained popular in China, indicating the challenges in enforcing such regulations. Mainland China continues to be a significant market for cryptocurrencies, with underground traders often using them to exchange currencies and circumvent regulation.
See: What’s the latest surrounding USDT (Tether) risks about?
China's crackdown on the use of Tether in illegal forex trading is a clear indication of its commitment to controlling financial risks and illegal activities within its borders.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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FASB Introduces New Crypto Accounting Rules
Crypto Accounting Rules | Dec 18, 2023
Image by Freepik
The Financial Accounting Standards Board (FASB) introduces the first-ever US crypto accounting rules
Previously, without specific US accounting rules for digital currencies, companies treated cryptocurrencies as intangible assets. This approach meant recording these assets at the purchase price and marking them down permanently if their value decreased, with gains only recognized upon sale. This method often negatively impacted the earnings of companies heavily invested in cryptocurrencies.
New Rules
- Under the new rules, companies must record their cryptocurrency holdings at fair value.
- This method aims to reflect the most current value of these assets, a departure from the outgoing practice that only allowed recording the lowest value.
- This change is significant for companies holding cryptocurrencies as it allows them to report both the increases and decreases in the value of their holdings, affecting net income.
- Companies will need to make a separate entry for crypto assets on their balance sheets and provide detailed disclosures in their financial statements.
- Determining the fair value of cryptocurrencies, given their inherent volatility, requires robust valuation methodologies.
- Companies will need to disclose their valuation methods according to ASC 820.
- Canadian firms will need to stay abreast of evolving best practices and perhaps develop new tools and frameworks to accurately reflect the value of their digital assets.
- The rules are set to take effect for fiscal years beginning after December 15, 2024, which means they will apply from 2025 for companies with a calendar year-end. However, companies have the option to adopt the rules earlier.
- The new rules have a narrow scope, intentionally excluding non-fungible tokens (NFTs), stablecoins, issuer-created tokens, and wrapped tokens. FASB may consider expanding the scope in the future if these assets become more prevalent in practice.
Reaction
The crypto industry, including companies like Marathon Digital and MicroStrategy, has welcomed these rules. Standardized accounting for cryptocurrencies is expected to boost investor confidence and potentially lead to broader adoption of digital currencies.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Progresses Talks With US Bitcoin ETF Issuers
Bitcoin Regulation | Dec 13, 2023
Image by pvproductions on Freepik
Bitcoin exchange-traded funds (ETFs) listing discussions between the SEC and asset managers have progressed suggesting that the SEC may soon approve these innovative financial products.
Here's what you need to know:
- As reported by Reuters, the talks have reached a stage where key technical aspects are being discussed. This includes custody arrangements, creation and redemption mechanisms, and investor risk disclosures indicating a readiness to consider Bitcoin ETFs seriously.
- The SEC began meaningfully engaging with issuers following a federal appeals court ruling that the agency failed to justify its rejection of Grayscale's ETF application. This has led to a more constructive dialogue between the SEC and ETF issuers.
- Thirteen firms, including Grayscale Investments, BlackRock, Invesco, and ARK Investments, have pending applications with the SEC for ETFs tracking the price of Bitcoin. The SEC has until January 10 to decide on ARK's filing, which is first in line.
- Industry leaders express optimism, with ARK CEO Cathie Wood stating, "The odds of several applications being approved had gone up," reflecting a positive sentiment among market participants.
See: El Salvador Update: ‘Volcano Bonds’, Bitcoin City, Crypto Visa Program
- A spot Bitcoin ETF would be a massive milestone, offering investors access to the world's largest cryptocurrency through the regulated stock market. The demand for such a product is expected to be high, with estimates of up to $3 billion in the initial days.
- Despite the progress, there are still unresolved issues, such as whether issuers will create a cash or an "in-kind" settlement mechanism. SEC Chair Gary Gensler, known for his negative stance on crypto, has not indicated a timeline for considering the ETF filings.
Nothing groundbreaking to report but 4 different issuers have met with the SEC regarding their #Bitcoin ETF filings in last few days. @BlackRock met with them yesterday for the third time in as many weeks. While @Grayscale, Franklin, and @Fidelity each had meetings last week pic.twitter.com/5gwBk83m0o
— James Seyffart (@JSeyff) December 12, 2023
Outlook
This development is crucial for investors and financial institutions alike, as it could lead to increased acceptance and integration of cryptocurrencies into diversified investment portfolios. It also sets a precedent for how regulatory bodies globally might approach emerging financial technologies, balancing innovation with investor protection.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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ASC Announces New Tech-Finance Advisory Committee
Regulation | Dec 12, 2023
Image: Unsplash/Ian Schneider
ASC Launches Advisory Committee for Tech-Innovation in Finance
The committee, composed of thought leaders and experts from various sectors including fintech, legal, regulatory, and finance, is tasked to bridge the gap between cutting-edge financial technologies and the existing securities regulatory framework. It's a timely initiative, as the financial sector is witnessing unprecedented growth in areas like blockchain, artificial intelligence, and digital currencies.
Committee Objectives
The primary objective of this advisory committee is to provide informed insights and recommendations to the ASC, helping to shape policies that are both progressive and pragmatic. The committee aims to:
- Create a platform for ongoing dialogue between innovators in the technology sector and securities regulators.
- Enhance the understanding of new technologies and their implications within the securities landscape among regulators and stakeholders.
- Offer expert advice on potential regulatory approaches that accommodate technological advancements while safeguarding investor interests and market integrity.
- Ensure that Alberta's regulatory environment is conducive to innovation, attracting fintech businesses and fostering economic growth.
Advisory Committee Members
- Matthew Burgoyne, Partner, Co-Chair of Digital Assets and Blockchain practice, Osler
- Alana Schoepp, Manager, Self-Serve Data & Analytics, Suncor
- Dr. Rei Safavi-Naini, Alberta Innovates Strategic Chair in Information Security, Professor of Computer Science, University of Calgary
- Dr. Nidhi Hegde, Fellow & Canada CIFAR AI Chair, AMII, Associate Professor of Computer Science, University of Alberta
- Dr. Alfred Lehar, Professor, Haskayne School of Business, University of Calgary
See: Alberta, The untold history of innovation from Canada’s badlands – Part 1
- Dr. Barry Sanders, Professor, Institute for Quantum Science and Technology, University of Calgary
- Dr. Jean-Christophe Boucher, Associate Professor, Faculty of Arts, Science Director, International Policy and Trade, School of Public Policy, University of Calgary
- Dr. Kaiwen Zhang, Professor, Information and Communications Technologies, École de technologie supérieure, Université du Québec
- Dr. Raymond A. Patterson, Professor and Area Chair, Business Technology Management, Haskayne School of Business, University of Calgary
- JQ Lien, Partner, Technology Strategy & Transformation, KPMG
The ASC is still looking for additional members in the following areas:
- Machine learning and artificial intelligence
- Digital banking and digital payments
- Peer-to-peer economy
- Blockchain protocols and smart contracts
- Decentralized finance and decentralized autonomous organizations
- Tokenomics
- Quantum computing
- Economics and finance
See: Bill 13: Alberta proposes ‘regulatory sandbox’ for innovative financial technology firms
Members are appointed for staggered three-year terms and meetings will take place quarterly. Interested subject matter experts are invited to contact Dr. Ryan Clements at email: ryan.clements@asc.ca.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Binance Under DOJ Microsope and Unprecedented Monitorship
Enforcement | Dec 11, 2023
Image courtesy of DALL-E
The United States Department of Justice (DOJ) unveils a 'compliance wishlist' and extensive monitorship over Binance
Unsealed on December 8, 2023, the DOJ's monitorship over Binance's operations and business activities is described in an 11-page document, which includes several stringent obligations for the crypto exchange. This development follows Binance and its former CEO, Changpeng "CZ" Zhao, admitting to violating U.S. money laundering and terror financing laws, agreeing to pay $4.3 billion in fines on November 21, 2023.
See: Ex-Binance CEO CZ Faces Up to 10 Years in Prison
These include:
- Binance must cooperate by providing U.S. authorities access to all documents, records, and resources upon request. This includes information related to its former employees, agents, intermediaries, consultants, representatives, distributors, licenses, contractors, suppliers, and joint venture partners.
- Various sections of the DOJ's criminal division will closely monitor Binance's activities. These include the section for money laundering and asset recovery, the section for national security, the section for counterintelligence and export control, and the office for the Western District of Washington’s United States Attorney.
- In addition to DOJ oversight, Binance will also be subject to five years of oversight by FinCEN.
This unprecedented level of oversight is likely to cost Binance millions of dollars. John Reed Stark, a former Securities and Exchange Commission (SEC) official, described Binance's new compliance commitments as a "consulting firm’s wish list" that could potentially shut down the platform. The SEC is also using Binance's settlement to strengthen its case against the exchange, pressing 13 charges related to unregistered offers and sales of various tokens and products.
Outlook
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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